Class Notes (837,484)
United States (325,077)
Accounting (78)
ACCT 497 (21)
Lee Suman (21)
Lecture 20

ACCT 497 Lecture 20: ACCT 497 Day 20

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ACCT 497
Lee Suman

ACCT 497 Day 20 • Accounts receivable o Test Accounts Receivable (Aged Trial Balance) o Confirmation o Perform analytical procedures o Test sales cut-off • 1) Accounts Receivable Aged Trial Balance o o You can just the collectability from the age of accounts • Uncollectible accounts o Inspect customer files for (collectability) o (Recalculate) allowance and bad debt expense o Verify reasonableness of allowance and bad debt expense o Inspect documentation for appropriateness of accounts written off ▪ Inspect documentation for additional collection procedures ▪ Inspect documentation for appropriate authorization. • Confirmations o Primarily for verifying (existence) o Factors likely to affect the reliability of confirmations ▪ Previous audit experience ▪ Intended recipient of the confirmation ▪ Type of information being confirmed • The auditor may confirm entire balances or individual transactions. ▪ Type of confirmation being sent • Types of confirmations o (Positive) Confirmations ▪ Response for correct balance ▪ small number of accounts are involved ▪ large number of errors are anticipated o (Negative) Confirmations ▪ No response for correct balance ▪ the assessed level of inherent and control risk is low ▪ A large number of small balances is involved o (Blank) Confirmations should be used if the recipient is likely to return a positive confirmation without verifying the accuracy of the information. ▪ This is the best confirmation, but often asking too much • Confirmations considerations o All confirmations returned by the post office as (non-deliverable) must be investigated o Responses to (positive) and blank confirmations provide more reliable evidence than (negative) non-responses. o Recipients of accounts recei
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